LONDON (Reuters) - Embattled British lender Metro Bank has raised 375 million pounds of vital capital to shore up its finances just hours after launching a discounted funding round on Thursday.

FILE PHOTO: A logo is seen on the outside of a branch of Metro Bank in central London July 28, 2010. REUTERS/Toby Melville//File Photo

The successful raise will help bolster confidence in the nine-year-old challenger bank, five months after it admitted it had under-reported the risk of its loan book by nearly 1 billion pounds.

A Metro Bank spokeswoman confirmed the lender closed its accelerated share placing at 18.30 GMT, less than three hours after the starting gun was fired on the raise.

The total amount was hiked from the 350 million pounds originally sought due to the high quality order book received, the spokeswoman added.

Investor and customer confidence in Metro has been shaken in recent months by corporate governance concerns and a tumbling stock price which has slashed more than 1.5 billion pounds off the bank’s market value.

Fidelity Management & Research, once Metro Bank’s second biggest investor, has cut its stake by nearly a third, a regulatory filing showed earlier this month.

The accelerated share placing was priced at 500 pence per share, 14% below the stock’s closing price on Wednesday.

A source close to the deal said there had been more than $1 billion of interest in the funding round.

The fundraising completed earlier than expected. Metro had earlier said it had been expected to close no later than 1500 GMT on Friday, Metro Bank said in an earlier statement.

Metro Bank’s top managers had said they would back the lender with American chairman and founder Vernon Hill subscribing up to 5 million pounds, while CEO Craig Donaldson will invest up to 350,000 pounds and CFO David Arden up to 75,000 pounds.

RBC, Jefferies and KBW advised on the fundraising.

Some nervous business accountholders and savers have headed for the exit since the accounting blunder, citing concerns about the bank’s stability after the board refused to accept the resignation of Chief Executive Craig Donaldson.

Metro Bank said today that further Metro Bank customers pulled deposits between May 10 and May 13 after press speculation about its financial health, but said this position was “stabilising”.

John Cronin, an analyst at Goodbody, had earlier said he believed Metro Bank would secure the funding it needed, but advised investors to “proceed with considerable caution”.

“We don’t know what the quantum of deposit outflows has been, we don’t have any certainty regarding management longevity, and I believe the 2023 double digit RoE [return on equity] target is unachievable,” he said.

Regulators at the Financial Conduct Authority and Prudential Regulation Authority have given no details on their investigations into the error or the possible penalties or sanctions which could arise.

Metro has made no financial provisions for a possible fine or potential litigation by investors seeking to recoup some of the losses sustained in this year’s share price rout.

The bank said it hoped the fundraising would enable management to proceed with plans to grow its branch network and increase its share of Britain’s retail banking market.

Customer deposits are guaranteed up to 85,000 pounds if a bank gets into financial difficulties, while post-crisis rules mean lenders are now structured to ensure deposits can be moved to another bank more easily to ensure continuity of service.